[opendtv] Re: Retransmission Letters Fly on Capitol Hill
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Sat, 31 Jul 2010 08:34:50 -0400
At 3:12 PM -0500 7/30/10, Manfredi, Albert E wrote:
No they aren't. Look at it this way. When the cable-only networks
get a piece of the ad revenues, they are also demanding a piece of
the subscription fee, right? I looked it up. Scripps was getting 25
cents of the subscription fee previously, for the combined HGTV and
Food Network transmissions on whatever cable system was the issue.
And they were demanding an increase to a total of ~$1.00 for both
programs.
NO. They get ALL of the subscriber fees that they negotiate. But the
MVPDs may sneak in a few extra nickles and dimes for themselves when
they raise rates and blame increased subscriber fees.
So, what do you expect the major congloms to get for their much
higher cost network shows? Nothing but the ad revenues? Why don't
you approach Scripps with that option?
Nothing but ad revenues, International syndication revenues, DVD
release revenues, and free use of spectrum that others are paying
billions for...
Cable distribution is simply expensive. Everyone up the chain gets a
big piece of the action. It's up to you, the conumer, to say no, or
put up and shut up.
Yes, the physical plant is expensive. The physical plant for
broadcasters is also costly, especially with respect to the power
bill. But broadcasters pay almost nothing for the spectrum they are
using to reach the public.
The subscriber fee business model was created to HELP fledgling cable
networks survive when the broadcast networks still dominated what
most people watched. Ted Turner, Time Warner, Fox and others have
invested billions to launch cable networks. Subscriber fees helped in
the early years when they were losing money - now subscriber fees are
providing a return on investment, as demonstrated by the fact the
Scripps Networks can raise fees because their content is very popular
and the MVPDs can also make more money by charging more for local ad
insertions.
I'll use again the example I gave you before. If I take the articles
you wrote for the publications you were contributing to, collect
them under some fancy new cover, combine other material in this new
publication, and then sold it for a very high price to a huge number
of people, would you be satisfied to get nothing at all? Or would
you expect a piece of the action?
I'd be flattered!
But most writers sign over any copyrights to the company that is paying them...
But your analogy is good here. The congloms create content, and get
back a huge chunk of the cost when this content is run on the
broadcast networks. Then they package it for syndication and sell it
around the world, typically moving into the profit column. Then they
release it on DVD and/or sell it via iTunes or Amazon. Yes there is
risk involved, as shows that tank typically do not generate much
revenue down stream. But all forms of media have winners and losers -
risk is implicit.
Where you seem to be having problems here is with the notion that
MVPDs are making huge amounts of money by delivering the signals of
broadcasters. They get NOTHING. They cannot insert ads in these
programs and they cannot put this content into a tier that requires
additional subscription fees. And when a station negotiates retrans
consent fees they must collect them and send the money to the station.
Once upon a time one could make the case that people subscribed to
cable to get the broadcast networks. In the early years of CATV
systems this was certainly true; but it was ALSO true that this
increased the size of the audience for the broadcaster allowing them
to reach more viewers and charge more for commercials. It was ONLY
AFTER cable started to offer original content and choice that most
people started to subscribe and take down their antennas. The notion
that people subscribed to cable to get the broadcast stations in
their market was ONLY TRUE for those who could not receive good
quality signals off the air. Cable and broadcast helped each other,
until more people started watching the cable content than the
broadcast content. So now broadcasters want the second revenue
stream too...
SO THEY CAN SURVIVE.
The broadcasters have enjoyed virtually free use of the spectrum
This has nothing to do with the broadcasters, in reality. It only
involves them because the FCC (and Congress) is going on the model
that broadcasters create content. If all broadcasters were O&Os,
then the picture would be clearer.
It has everything to do with the deal between the government and the
broadcasters. Content was and IS the product that causes people to
use the service. For decades broadcast was the ONLY viable way to
deliver content to the public, and the politicians protected this
business because it was ALSO the best way for them to get face time
with the public. And broadcast is STILL the only way the politicians
can reach nearly 100% of the public.
Broadcasters have enjoyed huge profit margins because they do not pay
for the spectrum they are using, and the politicians protect their
lucrative franchise.
1Broadcasters do pay spectrum fees, but this is besides the point
anyway. If you took away all of the OTA spectrum, the networks would
lose (you say) 10 percent of their audience. The rest would continue
to get the content over cable, just like any other cable-only
network. So call it what you will, you, the addcited MVPD
subscriber, would keep paying that subscription fee kickback to the
TV networks. Maybe it wouldn't be called "retrans consent," but it
would amount to exactly the same thing.
Perhaps. But IF the broadcast networks ditched broadcasting, they
would be just like every other cable channel. If enough people
watched they would be able to negotiate subscriber fees like every
other cable network.
Like it or not, content has value, as in your example about the stuff
I have written over the years. Somebody has to pay for the content.
Broadcast content has NEVER been free. It has been advertiser
supported, generating billions in profits for the congloms and local
broadcasters. Like taxes, the cost of advertising is included in the
price of everything you buy...
Hopefully we are moving toward a content distribution model where we
can choose what content we are willing to pay for, unlike the current
model, where everyone pays for the stuff they watch AND the stuff
they don't watch.
Regards
Craig
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